jmmx

Wall Street, R.I.P. Now What?

"Having lived through..." As stated in a previous posting... It's just beginning!

Welcome to the Great Republican Recession!

I am usually an optimistic guy (which is why I have lost a stupid amount in my portfolio this year)

But let's look at it.
If you are standing on level ground and you dig down 1 foot (debt) and step in, you're not doing bad. You can probably pretty easily fill that hole back in and get back. But if you are in a hole up to your neck, that 1 foot puts you underground, and it is REALLY difficult to reach out and start pulling dirt back in.

700 BILLION DOLLARS - that is a tremendous amount of debt to add onto the existing deficit. Oh yes we MAY get some of it back, but I would not count on getting much back. Have you guys forgotten that THE DEFICIT IS BAD FOR THE ECONOMY??

Where is this money going to come from? Not many options. The government can borrow it from Saudi Arabia (they have lotsa $$ now from selling us oil) or from China (that great bastion of democratic values), OR we can print more dollar bills – another 1/2 Trillion of them.

But let’s just remember that there is a price to pay. In either case, the world will devalue the dollar. Then prices will go up (especially OIL). In other words, there will be inflation. Inflation + slowing economy = Stagflation. Unfortunately, I think it is going to take us a lot of years to get out of this one!

Notice how oil is already up on the bailout news!

Point is: If we were not so far in debt (Federal Deficit), mostly from the Iraq War, then we might have weathered this much better.

Welcome to the Great Republican Recession!